*** Update ***

On January 31, 2012, the Commission approved a comprehensive overhaul of its Lifeline program: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-11A1.pdf. Reforms include:

Changes to eliminate waste, fraud, and abuse, saving up to $2 billion over 3 years

• Setting a savings target of $200 million for 2012, and reviewing the impacts of the Order after six months, and again after one year, in order to help determine future program budgets;

• Creating a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscriber;

• Creating eligibility databases from governmental data sources, enabling fully automated verification of consumers’ initial and ongoing Lifeline eligibility. This would reduce the potential for fraud while cutting red tape for consumers and providers. A database utilizing information from the three most common federal benefit programs through which consumers qualify for Lifeline will be created no later than the end of 2013;

• Establishing a one-per-household rule applicable to all providers in the program, defining household as an “economic unit” so that separate low-income families living at the same address can get connected;

• Establishing clear goals and metrics to measure program performance and effectiveness;

• Phasing out support for services such as Toll Limitation – subsidies to carriers for blocking or restricting long-distance service – and ending Link Up – subsidies to carriers for initial connection charges except for recipients on Tribal lands that are served by eligible telecommunications carriers (“ETCs”) that participate in both Lifeline and the high-cost program;

• Reducing burdens on carriers by establishing a uniform, interim flat rate of reimbursement, allowing carriers to obtain a subscriber’s signature electronically, and streamlining enrollment through uniform, nationwide eligibility criteria.

Modernizing Lifeline

• Adopting an express goal for the program of ensuring availability of broadband for all low-income Americans;

• Establishing a Broadband Adoption Pilot Program using up to $25 million in savings from other reforms to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. Starting this year, the program will solicit applications from broadband providers and select a number of projects to fund. Lifeline will help reduce the monthly cost of broadband service, but applicants will be expected to help address other challenges to broadband adoption, including the cost of devices and digital literacy;

• Proposing increased digital literacy training at libraries and schools. A Further Notice of Proposed Rulemaking seeks comment on using savings from other Universal Service Fund reforms to increase digital literacy training at libraries and schools, a key step in increasing broadband adoption;

• Building on FCC efforts to close the broadband adoption gap and address digital literacy, including the Connect-to-Compete initiative, which enlists government, non-profit, and private sector leaders to address broadband adoption barriers through digital literacy training and low-cost broadband availability;

• Allowing Lifeline support for bundled services plans combining voice and broadband or packages including optional calling features.

Additional information on the comprehensive overhaul of Lifeline may be found in the FCC’s press release and online guide.